LightSquared followed through with weekend rumors by filing for Chapter 11 bankruptcy protection this afternoon, noting the move will give it “breathing room” to work through current regulatory challenges that prevent it from gaining access to its spectrum assets.
The company stated that despite the filing it expects to continue normal operations, including support of its satellite-based offering that serves public safety, emergency response, government and military users.
Despite recent upheaval amongst its leadership, the company said it expects its current management lineup will remain intact during the bankruptcy proceedings. Reports had indicated that current financial backer, Philip Falcone, has also been asked to step aside. Falcone’s Harbinger Capital Partners has been the largest financial backer of LightSquared’s attempt to build out a nationwide LTE network, which management had noted could require up to $14 billion in funding through the end of the decade.
“The filing was necessary to preserve the value of our business and to ensure continued operations. The voluntary Chapter 11 filing is intended to give LightSquared sufficient breathing room to continue working through the regulatory process that will allow us to build our 4G wireless network,” said Marc Montagner, interim co-COO and CFO of LightSquared. “All of our efforts are focused on concluding this process in an efficient and successful manner.”
Bottom Line: LightSquared’s dream of rolling out a nationwide, wholesale LTE network continues to dim as the financial burden of those dreams became reality. While the current spectrum crunch seemed to lend further support to these plans as opposed to previous attempts at similar wholesale operations, interference concerns with some ground-based GPS systems derailed those chances.
Perhaps the more important issue behind this is the government’s control over spectrum, as many admit that LightSquared’s predicament is being caused by GPS receivers that are overstepping their boundaries, something “licensed” spectrum is supposed to avoid.
Until, or if, this issue can be resolved, look for the wireless industry to continue horse trading in spectrum assets. Those with spectrum to spare, or those looking to bring partners on board, should continue to see those assets become more valuable.
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